Union Pacific Corp. (NYSE:UNP)

The analysis of the financial ratios over the five-year period reveals several notable trends in the company's operational and financial performance.

Total Asset Turnover

The reported and adjusted total asset turnover ratios both show an initial increase from 0.31 in 2020 to a peak of 0.38 in 2022, followed by a slight decline stabilizing at 0.36 in 2023 and 2024. This indicates an improvement in asset utilization efficiency through 2022, with a moderate reduction but sustained relatively high turnover in subsequent years.

Current Ratio

Both reported and adjusted current ratios decreased significantly from 1.01 in 2020 to 0.62 in 2021, indicating a notable decline in short-term liquidity. Thereafter, the ratio gradually increased to 0.81 in 2023 before slightly falling to 0.77 in 2024, suggesting partial recovery but remaining below 2020 levels, which may imply continued cautious liquidity management.

Debt to Equity Ratio

The reported debt to equity ratio rose sharply from 1.58 in 2020 to a high of 2.74 in 2022, illustrating increasing leverage. Subsequently, it declined to 2.2 in 2023 and further to 1.85 in 2024, indicating efforts to reduce leverage. Adjusted figures follow a similar trend but at lower levels, moving from 0.97 in 2020 to 1.39 in 2022 and down to 1.08 in 2024, affirming the pattern of increased borrowing followed by deleveraging.

Debt to Capital Ratio

The reported debt to capital ratio increased from 0.61 in 2020 to 0.73 in 2022, and then decreased to 0.65 by 2024. Adjusted data mirrors this trend with values rising from 0.49 to 0.58 and subsequently declining to 0.52. This indicates a peak in the proportion of debt financing around 2022 with a partial reduction in reliance on debt financing afterwards.

Financial Leverage

Reported financial leverage increased substantially from 3.68 times in 2020 to 5.38 times in 2022, followed by a decline to 4.01 times in 2024. Adjusted financial leverage exhibits a similar but less pronounced pattern, increasing from 2.14 to 2.6 and then declining to 2.25. This suggests the company used more assets financed by debt or equity relatively more intensively up to 2022 and moderated thereafter.

Net Profit Margin

The reported net profit margin improved from 27.38% in 2020 to a high of 29.92% in 2021, then declined to 26.45% in 2023 before rebounding slightly to 27.82% in 2024. The adjusted margin shows a sharper increase, peaking at 33.7% in 2021 and trending downward to 27.48% in 2024. This indicates an overall strong profitability performance with some volatility, possibly impacted by operational or market conditions after 2021.

Return on Equity (ROE)

The reported ROE grew markedly from 31.54% in 2020 to a peak of 57.54% in 2022, followed by a marked decline to 39.95% in 2024. Adjusted ROE displayed a similar trend, rising from 18.7% to 30.12% and diminishing to 22.18% by 2024. The sharp increase until 2022 reflects high profitability relative to shareholder equity, while the decline suggests less effective equity utilization or increased equity base after 2022.

Return on Assets (ROA)

Reported ROA increased from 8.57% in 2020 to around 10.69% in 2022, then decreased slightly to 9.96% by 2024. The adjusted ROA exhibited a similar pattern, rising from 8.76% in 2020 to 11.6% in 2022, followed by a decrease to 9.84% in 2024. This pattern suggests improvements in asset profitability until 2022, followed by a moderate reduction but sustained strong performance thereafter.

In summary, the company experienced improving operational efficiency and profitability measures up to 2022, coupled with increased financial leverage and debt levels. Post-2022, there is evidence of a strategic shift towards reducing leverage and stabilizing liquidity, alongside a moderate decline in profitability ratios. This reflects a potential response to changing market conditions or internal strategic adjustments during the later years.

Operating Revenues

The operating revenues demonstrate a general upward trajectory from 2020 through 2024, increasing from $19,533 million to $24,250 million. The growth was particularly notable between 2021 and 2022, with an increase of approximately 14%. A slight decline occurred in 2023, followed by a modest recovery in 2024, indicating some fluctuations but an overall positive revenue trend.

Total Assets

Total assets have shown a steady increase year-over-year, growing from $62,398 million in 2020 to $67,715 million in 2024. The growth rate appears consistent but moderate, with incremental increases ranging between approximately 1.7% and 2.5% annually. This reflects prudent asset management and gradual expansion over the five-year period.

Reported Total Asset Turnover

The reported total asset turnover ratio improved from 0.31 in 2020 to a peak of 0.38 in 2022, suggesting enhanced efficiency in generating revenues from the asset base. However, this ratio experienced a decline to 0.36 in 2023 and remained stable at 0.36 in 2024. The peak followed by a slight dip could indicate changing operational or market conditions impacting asset utilization effectiveness.

Adjusted Total Assets and Turnover

Adjusted total assets closely mirror the reported total assets both in magnitude and trend, moving from $62,415 million in 2020 to $67,721 million in 2024. The adjusted total asset turnover aligns exactly with the reported turnover figures, showing the same pattern of increase through 2022 and minor reduction thereafter. This consistency suggests that the adjustments applied have minimal impact on the measure of asset efficiency and confirm the robustness of the turnover analysis.

Summary

Overall, the data indicates a company experiencing steady growth in both operating revenues and asset base over the analyzed period. Efficiency in asset utilization improved initially but has somewhat leveled off in recent years. The stability in asset turnover alongside revenue growth and increasing assets could imply a balanced approach between expanding asset holdings and optimizing their use. The observed patterns reflect resilience with some variability, warranting ongoing monitoring to sustain and enhance operational efficiency.

Current Assets

Current assets decreased from 4,214 million US dollars in 2020 to 3,551 million US dollars in 2021. Subsequently, there was an upward trend to 3,952 million in 2022 and continued growth to 4,148 million in 2023, followed by a slight decline to 4,021 million in 2024.

Current Liabilities

Current liabilities exhibited a notable increase from 4,173 million US dollars in 2020 to 5,744 million in 2021. After peaking in 2021, liabilities decreased to 5,520 million in 2022 and further to 5,106 million in 2023, before rising again to 5,254 million in 2024.

Reported Current Ratio

The reported current ratio showed a significant decline from 1.01 in 2020 to 0.62 in 2021, indicating a reduction in short-term liquidity. Following this low, the ratio improved progressively to 0.72 in 2022 and 0.81 in 2023, but then slightly decreased to 0.77 in 2024, remaining below the initial 2020 level.

Adjusted Current Assets

Adjusted current assets closely mirrored the trend of current assets, with a decrease in 2021 followed by growth in 2022 and 2023, and a slight decline in 2024. Values ranged from 4,231 million US dollars in 2020 down to 3,561 million in 2021, then increasing to 3,962 million in 2022, 4,157 million in 2023, and finally 4,027 million in 2024.

Adjusted Current Ratio

The adjusted current ratio followed the same pattern as the reported current ratio, falling sharply in 2021 before gradually improving through 2023 and experiencing a marginal decrease in 2024. The ratio declined from 1.01 in 2020 to 0.62 in 2021, rose to 0.72 in 2022 and 0.81 in 2023, then tapered to 0.77 in 2024.

The financial data reveals notable trends in the company's debt and equity structure over the five-year period.

Total Debt

Total debt increased steadily from 26,729 million USD in 2020 to 33,326 million USD in 2022, followed by a decline to 31,192 million USD by the end of 2024. This pattern suggests that the company initially increased leverage but later reduced its absolute debt levels.

Common Shareholders’ Equity

Common shareholders' equity showed a declining trend from 16,958 million USD in 2020 to a low of 12,163 million USD in 2022, before recovering to 16,890 million USD in 2024. This indicates an equity contraction during the early period, subsequently followed by a rebuilding phase.

Reported Debt to Equity Ratio

The reported debt to equity ratio rose from 1.58 in 2020 to a peak of 2.74 in 2022, reflecting increased leverage and reduced equity base. Thereafter, the ratio improved to 1.85 by 2024, indicating deleveraging and equity strengthening.

Adjusted Total Debt

Adjusted total debt parallels the reported total debt trend but on a slightly higher scale, increasing from 28,333 million USD in 2020 to a peak of 34,957 million USD in 2022, then decreasing to 32,463 million USD in 2024. This adjustment may account for off-balance sheet items or other liabilities.

Adjusted Common Shareholders’ Equity

Adjusted equity figures are significantly higher than reported equity, starting at 29,222 million USD in 2020 and declining to 25,206 million USD in 2022, followed by an increase to 30,047 million USD in 2024. The pattern mirrors reported equity movements but at elevated levels, suggesting adjustments for items such as unrealized gains or other comprehensive income.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio demonstrates a more conservative leverage profile, increasing from 0.97 in 2020 to 1.39 in 2022, before improving to 1.08 in 2024. This indicates a less aggressive leverage usage when considering the adjusted metrics as compared to the reported ratios.

Overall, the data indicates that the company experienced a period of increasing leverage and shrinking equity through 2022, after which it undertook efforts to reduce debt levels and strengthen equity, improving both reported and adjusted debt-to-equity ratios by 2024.

The financial data presents a detailed view of the company's debt and capital structure over a five-year period from 2020 to 2024. The analysis primarily focuses on trends in total debt, total capital, and their corresponding debt-to-capital ratios, both reported and adjusted.

Total Debt

The total debt increased steadily from US$26,729 million in 2020 to a peak of US$33,326 million in 2022, followed by a gradual decline to US$31,192 million by 2024. This suggests the company initially increased leverage but started to reduce nominal debt levels after 2022.

Total Capital

Total capital exhibited a consistent upward trend, rising moderately from US$43,687 million in 2020 to US$48,082 million in 2024. This growth indicates an expanding capital base, likely driven by retained earnings or equity financing, providing a larger asset base against which debt is measured.

Reported Debt to Capital Ratio

The reported debt to capital ratio climbed from 0.61 in 2020 to a high of 0.73 in 2022, reflecting increased leverage relative to capital in that year. Subsequently, the ratio decreased to 0.65 by 2024, signaling a reduction in leverage or a faster growth of capital relative to debt in recent years.

Adjusted Total Debt

Adjusted total debt follows a similar pattern to total debt but starts at a higher base (US$28,333 million in 2020) and peaks at US$34,957 million in 2022. From 2022 onwards, adjusted debt decreases steadily to US$32,463 million in 2024. The adjustment presumably accounts for additional liabilities or off-balance sheet items, suggesting more comprehensive debt measures also reflect deleveraging after 2022.

Adjusted Total Capital

Adjusted total capital rises consistently from US$57,555 million in 2020 to US$62,510 million in 2024. The adjusted capital base is significantly higher than reported capital, likely due to a broader definition that includes additional reserves or adjustments. The steady increase highlights consistent capital growth through the period.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio moved upward from 0.49 in 2020 to 0.58 in 2022, reflecting a buildup of debt relative to capital during these years. Post-2022, the ratio declines gradually to 0.52 in 2024, indicating an improvement in the company's leverage position when considering a more comprehensive debt and capital base.

Overall, both the reported and adjusted figures reveal a pattern of increasing leverage culminating around 2022, followed by a concerted effort to reduce debt levels or strengthen capital over the last two years. The consistent growth in total and adjusted capital supports a stronger balance sheet foundation. The company's leverage ratios suggest cautious management of debt, aiming to balance growth and financial stability.

Total Assets

The total assets demonstrated a steady increase over the five-year period, rising from US$62,398 million in 2020 to US$67,715 million in 2024. This trend indicates consistent asset growth year over year, reflecting ongoing expansion or acquisition efforts.

Common Shareholders’ Equity

Common shareholders’ equity experienced a decline from US$16,958 million in 2020 to US$12,163 million in 2022, followed by a recovery to US$16,890 million in 2024. This pattern suggests an initial reduction in equity strength, potentially due to losses or distributions, with subsequent improvement in later years.

Reported Financial Leverage

The reported financial leverage ratio increased notably from 3.68 in 2020 to a peak of 5.38 in 2022, then declined to 4.01 by 2024. The initial rise indicates growing reliance on debt relative to equity, while the later decrease suggests efforts to deleverage or improve equity base.

Adjusted Total Assets

Adjusted total assets closely followed the trend of reported total assets, increasing from US$62,415 million in 2020 to US$67,721 million in 2024. This confirms the asset growth is consistent even after adjustments.

Adjusted Common Shareholders’ Equity

Adjusted common shareholders’ equity also declined from US$29,222 million in 2020 to US$25,206 million in 2022, before rising to US$30,047 million in 2024. This mirrors the pattern in reported equity but suggests the company’s underlying equity, after adjustments, remains stronger than the reported figures imply.

Adjusted Financial Leverage

The adjusted financial leverage ratio increased from 2.14 in 2020 to 2.60 in 2022, then decreased to 2.25 in 2024. While the trend is similar to the reported leverage, the magnitude is lower, indicating that adjustments reduce perceived leverage risk.

The financial data reveals several notable trends over the five-year period from 2020 to 2024.

Net Income

Net income showed a general upward trend between 2020 and 2022, increasing from 5,349 million US dollars in 2020 to a peak of 6,998 million US dollars in 2022. However, it declined to 6,379 million in 2023 before recovering somewhat to 6,747 million in 2024. This indicates some fluctuation after 2022, with a dip in 2023 followed by partial rebound.

Operating Revenues

Operating revenues exhibited consistent growth from 19,533 million US dollars in 2020 to a high of 24,875 million in 2022. Subsequently, revenues slightly declined in 2023 to 24,119 million and stabilized near that level in 2024 at 24,250 million. The overall trend suggests strong revenue growth initially, with a leveling off in the last two years.

Reported Net Profit Margin

The reported net profit margin increased from 27.38% in 2020 to a peak of 29.92% in 2021. Afterward, it gradually declined to 28.13% in 2022, further dropping to 26.45% in 2023, before modestly rising again to 27.82% in 2024. This pattern indicates tightening profitability relative to revenues after 2021, with a slight improvement in the most recent year.

Adjusted Net Income

Adjusted net income followed a trajectory similar to net income. It increased significantly from 5,465 million in 2020 to 7,592 million in 2022, followed by a decline to 6,463 million in 2023, and a slight recovery to 6,663 million in 2024. The adjustment appears to have smoothed some volatility compared to reported net income, but the overall pattern remains consistent.

Adjusted Net Profit Margin

The adjusted net profit margin peaked markedly at 33.7% in 2021, up from 27.98% in 2020. It then moved downward to 30.52% in 2022 and decreased further to 26.8% in 2023, recovering marginally to 27.48% in 2024. This mirrors the reported net margin trend but starts from a higher peak and exhibits a sharper subsequent decline, showing that adjustments had a more pronounced effect on profitability normalization.

In summary, the company experienced strong revenue and profitability growth through 2021 and 2022, followed by a period of contraction in margins and net income in 2023. The year 2024 shows signs of stabilization and modest recovery. The adjusted figures indicate that after accounting for extraordinary items or other adjustments, profitability was initially more robust but also faced a sharper decline, emphasizing the need to monitor underlying earnings quality closely.

Net Income

Net income exhibited a general upward trend from 2020 to 2022, increasing from $5,349 million to $6,998 million. However, in 2023, net income declined to $6,379 million before recovering slightly to $6,747 million in 2024.

Common Shareholders’ Equity

Common shareholders’ equity showed a decreasing trend between 2020 and 2022, dropping from $16,958 million to $12,163 million. It then reversed course, increasing to $14,788 million in 2023 and further to $16,890 million in 2024, approaching the initial 2020 level.

Reported Return on Equity (ROE)

Reported ROE displayed a significant rise between 2020 and 2022, increasing from 31.54% to a peak of 57.54%. This peak was followed by a decline to 43.14% in 2023 and a further decrease to 39.95% in 2024, indicating reduced profitability relative to shareholders’ equity in the later years.

Adjusted Net Income

Adjusted net income followed a similar pattern to net income, increasing steadily from $5,465 million in 2020 to $7,592 million in 2022. Subsequently, it declined to $6,463 million in 2023 and experienced a slight recovery to $6,663 million in 2024.

Adjusted Common Shareholders’ Equity

Adjusted common shareholders’ equity decreased from $29,222 million in 2020 to $25,206 million in 2022, followed by increases to $27,920 million in 2023 and $30,047 million in 2024. This pattern mirrors that observed in common shareholders’ equity but at higher absolute values.

Adjusted Return on Equity (ROE)

Adjusted ROE increased from 18.7% in 2020 to 30.12% in 2022, reflecting improved adjusted profitability on equity. Thereafter, it declined to 23.15% in 2023 and further to 22.18% in 2024, indicating a downward adjustment in profitability in relation to adjusted equity.

Overall Observations

The financial data indicates that profitability, as measured by both reported and adjusted ROE, increased substantially in the early years (2020-2022) but declined thereafter. Net income and adjusted net income followed a similar trajectory, peaking in 2022 before a decrease and partial recovery. Shareholders’ equity, both reported and adjusted, contracted until 2022 and subsequently expanded towards or beyond initial levels by 2024. The trends suggest an overall improvement in earnings performance until 2022, followed by a moderation in profitability and equity base expansion, pointing to possible market or operational challenges affecting recent years.

Net Income

The net income shows an overall upward trend from 2020 through 2024, increasing from 5,349 million US dollars in 2020 to 6,747 million US dollars in 2024. Notably, there is a peak in 2022 at 6,998 million, followed by a decline to 6,379 million in 2023, with a slight recovery in 2024.

Total Assets

Total assets exhibit steady growth over the five-year period, rising consistently from 62,398 million US dollars in 2020 to 67,715 million US dollars in 2024. The increases each year are moderate but consistent, reflecting incremental asset accumulation or appreciation.

Reported Return on Assets (ROA)

The reported ROA improves from 8.57% in 2020 to a peak of 10.69% in 2022, indicating enhanced efficiency in generating profit from assets. After 2022, there is a decline to 9.5% in 2023, followed by a slight rebound to 9.96% in 2024, showing some volatility but maintaining higher levels than at the beginning of the period.

Adjusted Net Income

Adjusted net income follows a similar pattern to net income but at consistently higher values. It rises sharply from 5,465 million US dollars in 2020 to 7,592 million in 2022, then falls to 6,463 million in 2023 before partially recovering to 6,663 million in 2024. This suggests that adjustments account for notable factors affecting reported earnings and highlight variability in performance.

Adjusted Total Assets

The adjusted total assets closely mirror the trend in total assets, with a steady increase from 62,415 million US dollars in 2020 to 67,721 million in 2024, showing little deviation from reported totals.

Adjusted Return on Assets (ROA)

Adjusted ROA increases from 8.76% in 2020 to a high point of 11.6% in 2022, indicating improved asset utilization when adjustments are considered. Similar to the reported ROA, it then declines to 9.63% in 2023 before slightly recovering to 9.84% in 2024. The adjusted ROA generally remains higher than the reported ROA, emphasizing the impact of adjustments on profitability metrics.